News and Case Studies

DOL abandons appraiser-as-fiduciary rule

In late January, the Department of Labor (DOL) announced that it will abandon the “appraiser-as-fiduciary” rule from its planned reproposal of a broader fiduciary rule. As reported in the January 2015 issue of ASA’s Capital Action publication, the ASA has learned that when the DOL reproposes a broad set of rules affecting fiduciaries and prohibited transactions, the proposal will not…

Court Case – Estate of Franklin Z. Adell v. Commissioner

Estate of Franklin Z. Adell v. Commissioner, T.C. Memo 2014-155, Filed August 4, 2014.

The Facts:

Mr. Franklin Z. Adell (“the decedent”) died on August 13, 2006. At the time of his death, among other assets, the decedent owned a 100% interest in (“STN”), a cable uplinking company created to provide services to one customer, a non-profit religious network called The Word Network…

Court Case – Estate of Helen P. Richmond, Petitioner vs. Commissioner of IRS

Estate of Helen P. Richmond, Petitioner vs. Commissioner of IRS, T.C. Memo 2014-26, Filed February 11, 2014.

The Facts:

Ms. Helen Richmond passed away in December of 2005. At the time of her death, Ms. Richmond owned a 23.44% interest in a family-owned personal holding Company, Pearson Holding Company (“PHC”). As of December 2005, PHC has 2,338 shares of common stock outstanding held by 25…

What Can Trigger an Automatic IRS Audit?

Here’s an interesting tidbit that was uncovered at last November’s 2013 AICPA Forensic & Valuation Services Conference. IRS audits can be triggered when the same firm does a client’s tax work and valuation work. It was indicated that IRS agents in some areas will pull an estate and gift tax return that is prepared by the same firm that prepares the attached valuation report. A poll of…

Estate of John F. Koons III, Petitioner vs. Commissioner of IRS

Estate of John F. Koons III, Petitioner vs. Commissioner of IRS, T.C. Memo 2013-94, Filed April 8, 2013.

The Facts:

The decedent, John F. Koons, III, died on March 3, 2005. Mr. Koons served as the president and CEO of Central Investment Corp. (“CIC”). CIC was a bottler and distributor of Pepsi soft drinks and was in the business of selling food and drinks from vending machines. Mr. Koons…

The Business Plan — Creating a Business Blueprint for 2013

The outlook for business growth in 2013 depends mainly on one’s point of view, but at least this appears certain:  The success of a business, or lack thereof, can often be traced back to the business plan. What’s more, the absence of a business plan, or one that is skimpy or thrown together in a rush, can be damaging.

Look at an annual business plan as a detailed blueprint for the upcoming…

Selling a Business for Top Dollar All Starts with AWARENESS of the Planning Process!

Business owners need to recognize that operating a business on a day-to-day basis is not the same thing as preparing it for sale.  There are many steps necessary in the planning process and it all starts with the AWARENESS of that fact.  It is in the best interests of a business owner to get professional advice early – from a business broker, mergers & acquisitions advisor, exit planning…

What Are the Main Factors That Impact the Value of a Business Interest?

The value of a business interest is impacted by a number of factors, many of which may change from year to year.  Factors that impact the value of a business include the following:

Financial performance—If a business has poor earnings capacity or is on the verge of bankruptcy, the value of the business is going to be negatively impacted.  If the business has strong historical earnings but…

Why Should a Business Have an Annual Valuation Program?

The most commonly cited benefits of an annual business valuation policy include the following:

Provides Accountability and Performance—An annual business valuation of a closely held firm enables the shareholders to see the value that is being consistently created or destroyed by the management of the firm in its execution of the corporate strategic plan.

Fulfills Reporting or Complianc…

How to Make Your Company Irresistible to Potential Buyers

The Hierarchy of Recurring Revenue

One of the biggest factors in determining the value of your company is the extent to which an acquirer can see where your sales will come from in the future. If you’re in a business that starts from scratch each month, the value of your company will be lower than if you can demonstrate the source or sources of your future revenue.  A recurring revenue stream…

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